2017 Economic Outlook

What We’ll Cover
 2016 returns
Can the expansion last?
Major factors for 2017
Our expectations

S&P 500: A Bad Start,
But a Strong Finish
3
Source: Morningstar Direct, First Western Trust. As of 12/31/2016.
1,800
1,850
1,900
1,950
2,000
2,050
2,100
2,150
2,200
2,250
2,300
Apr. 28: Current
bull market become
second-longest in
history.
Jun. 23: UK votes to
leave the EU (“Brexit”)
briefly roiling financial
markets.
Jan. 15: Oil closes
below $30/bl for first
time in 12 years.
Jul. 8: U.S. 10-Year
Treasury yield fall to
all-time low of 1.36%.
Aug. 15: S&P 500
reaches new all-time
record high.
Nov. 8: Donald
Trump wins U.S.
Presidential election.
Dec. 14: U.S. Federal
Reserve increases
Fed Funds rate by
0.25% to 0.50-0.75%.
Nov. 30: OPEC
agrees to cut
production for first
time since 2008.
2016 began poorly
with the S&P 500
experiencing its
worst start to any
year due to concerns
over global economic
growth.
But, improved
corporate earnings,
rebounding energy
prices, and renewed
optimism about the
U.S./global economy
helped push markets
higher over the
course of the year.

Lorem Ipsum Vestibulum et
Metus Felis, non Estibulum Nec Tincidunt Felis.
Executive Presentation | June 2011
Volatility Is a Common
Occurrence in Investing
While volatility
can put investors
on edge, it is a
normal part of
investing.
Over the past 35
years, the S&P 500
has experienced an
average -14%
intra-year decline,
yet calendar year
returns largely
still ended
positive.
Source: Standard & Poor’s, First Western Trust. *As of 12/31/2016.
26
-10
1517
1
26
15
2
12
27
-7
26
4 7
-2
34
20
31
27
20
-10
-13
-23
26
9
3
14
4
-38
23
13
0
13
30
6
1
12
-17-17
-14
-7
-12
-8 -9
-34
-8 -8
-20
-6 -6-5
-9
-3
-8
-11
-19
-12
-17
-26
-32
-14
-8 -7 -8-10
-47
-28
-16-18
-10
-5.8 -5.8
-12
-9
-55
-45
-35
-25
-15
-5
5
15
25
35
45
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
S&P 500 Calendar Year Returns (%) vs. Intra-year Declines (%)
Calendar Year Returns (PR) Intra-Year Declines (PR)

Source: Bloomberg, Morningstar Direct, First Western Trust.
-19%
31%
14%
5%
9% 9%
-2% 2%
43%
-18%
-14%
8%
21%
3%
1%
8%
2%
2%
2% 2%
2%
2%
2%
2%
26%
15%
2% 16%
32%
14%
1%
12%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
2009 2010 2011 2012 2013 2014 2015 2016
Dividends
Multiple Expansion
Earnings Growth
The S&P 500’s
returns are split into
multiple components.
In 2016, multiple
expansion drove 8%
of the S&P 500’s 12%
return. Dividends
have held steady for
the past 8 years, and
earnings growth
rebounded to 2% in
2016 after -2%
returns in 2015.
S&P 500 Annual Total
Returns Were Up in 2016

What We’ll Cover
2016 returns
Our expectations

Source: JPMorgan, BEA, NBER, First Western Trust.
*Chart assumes current expansion started in July 2009 and continued through December 2016, lasting 90 months so far.
Data for length of expansions and recessions obtained from the National Bureau of Economic Research (NBER).
90
0
20
40
60
80
100
120
Length of Economic Expansions & Recessions
Expansions
Recessions
1912 1921 1933 1949 1961 1980 2001
On average, expansions last about
47 months, and recessions last
about 15.
Since July 2009, our economic
expansion has lasted 90 months
(or 7.5 years), but much of the
growth has been measured. Only
recently have we started to see
investors becoming more confident
and less fearful since the Great
Recession.
While 7.5 years may seem like a
long time, the United States has
experienced an expansion lasting
10 years.
1900
Our Current Expansion
Has Lasted 90 Months

Executive Presentation | June 2011 Source: Capital Group, First Western Trust.
25.75
25.5
20.5
17
16.75
15
10
8.75
7.75
7.5
Netherlands ( 1982 - 2008)
Australia (1991 - present)
Canada (1961 - 1981)
France (1975 - 1992)
United Kingdom (1991 - 2008)
Sweden (1993 - 2008)
U.S. (1991 - 2001)
U.S. (1961 - 1969)
U.S. (1982 - 1990)
U.S. (2009 - present)
The current U.S. expansion
continues to show that age is
only a number.
Including the U.S., several
countries have enjoyed very
long expansions in the past.
Although we are likely closer
to the end of this cycle than
the beginning and political
uncertainty remains, there
are few signs of imbalances
building in the economy or
reason to believe the
expansion can’t continue.
Expansions Have Lasted
10+ Years in Many Countries

Source: Bloomberg, First Western Trust.
2014 – 2015 Actuals 2016 – 2018 Forecasted
2016F
2016F
2016F
2016F
2016F
2016F
-6.0
-1.0
4.0
9.0
14.0
U.S.:
Emerging
Markets (incl.
China): 3.8%
Eurozone:
1.6%
China:
6.7% Japan:
0.9%
Global:
3.1%
2018F
While a number of geopolitical risks, including Brexit and various populist movements could
impact the economy, global GDP projections for 2016 – 2018 have largely been encouraging.
Global GDP Shows Some
Positive Signs
2014
2014
2014
2014
2014
2014
2018F
2018F
2018F
2018F
2018F

Source: BLS, Factset, JPMorgan, First Western Trust.
In November, the U.S.
unemployment rate hit
4.6%, indicating that
unemployment has moved
into ‘full employment’
territory.
Wages are beginning to
show improvement with
wage gains widespread
across industries, which
could boost consumer
spending in 2017.
Wage Gains Could Signal
Increased Consumer Spending

Source: Fidelity Investments (AART), First Western Trust.
While investor
concern over the
timing of the first
rate hike led to
market volatility,
the rate increases
should not be
feared.
Instead, they
should be viewed as
a sign of a
strengthening
economy. Fidelity Investments proprietary analysis of historical asset class total returns, using data from indices from: Barclays, Fidelity Investments,
Morningstar, Standard & Poor’s.
Timing of Rate Hikes Have
Led to Market Volatility

Source: Federal Reserve, CME Group, First Western Trust. As of 12/29/2016.
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
YE 2017 YE 2018 YE 2019
1.4%
2.2%
2.8%
1.1%
1.7%
2.0%
Fed Funds Rate Forecast: Fed vs. Market Implied
Fed Forecast Market Implied
At its December meeting,
the Fed revised its
outlook for 2017 rate
hikes from two (2) to
three (3), leading to a
year-end forecast of 1.4%.
The market continues to
be less aggressive in its
forecast, especially for
2018 and 2019.
We Expect Three Interest
Rate Hikes in 2017

Source: JPMorgan Asset Management, FactSet, Standard & Poor’s, FRB, First Western Trust.
When 10-year treasury
yields are below 5%,
rising rates have
historically been
associated with rising
stock prices.
This bodes well for
investors in 2017.
CorrelationCoefficient
10-Year Treasury Yield
May 1963 – December 2016
Returns based on price index only and do not include dividends. Markers represent monthly 2-year correlations only.
Initial Rate Hikes Could
Support Growth in Equities

Source: Bloomberg, First Western Trust. As of
12/31/2016
The recent rise in
interest rates seemed
to catch many
investors off-guard.
However, the move
was not unusual in the
context of the current
recovery or over longer
time periods.
It’s important to
remember that,
despite the recent rise,
interest rates remain
near historic lows.
2.44
0
1
2
3
4
5
6
7
8
9
10
1/2/1990
1/2/1991
1/2/1992
1/2/1993
1/2/1994
1/2/1995
1/2/1996
1/2/1997
1/2/1998
1/2/1999
1/2/2000
1/2/2001
1/2/2002
1/2/2003
1/2/2004
1/2/2005
1/2/2006
1/2/2007
1/2/2008
1/2/2009
1/2/2010
1/2/2011
1/2/2012
1/2/2013
1/2/2014
1/2/2015
1/2/2016
10-Year U.S. Treasury Yield: 1990 - 2016
Keep Yields in Perspective

What We’ll Cover
2016 returns
Our expectations for 2017

• Economic expansion is showing some
renewed momentum coming into
2017
• Growth is expected to be supported
more by fiscal policy as monetary
stimulus is pulled back
• Corporate profits have the potential
to show high single digit
improvement over 2016 helped by
energy, a reasonably stable dollar,
and potential governmental
initiatives
• P/E multiples may be negatively
impacted by rising rates and higher
inflation
• U.S. cannot grow in a vacuum and
requires a stable-to-accelerating
global economy
• Overall, expect measured growth in
U.S. equities
Expect Another Year of Positive
Returns in U.S. Equities

• Eurozone economies are gaining
momentum despite political
headwinds
• Japan could benefit from a weak yen
and supportive Abenomics
• A “hard” Brexit will likely be pursued
but exit and trade negotiations will
take years
• Valuations of Developed Market
stocks look cheaper than the U.S.-
don’t avoid them due to past
disappointment
This Could Be the Year When
International Stocks Shine

• China has shown improvement but
remains a wild card as the Central
Government targets 6.5%-7% while
simultaneously reducing leverage
• Investor confidence in emerging
economies has improved notably since
1Q16. Contributing factors include
perceived stabilization in China, some
recovery in commodity prices, and
accommodative policies by major
central banks
• Many emerging market sovereign
balance sheets have improved
• Rising U.S. interest rates coupled with
a strong dollar could be a headwind
for emerging markets
• Be cautious with emerging market
investments
Emerging Markets Have Good
Valuations But Take Caution

• The Fed believes that the
upside risks to their outlook
have increased
• The Fed will likely raise rates
three times in 2017, but will
remain data dependent
• Bonds remain a stabilizing
element of a diversified
portfolio.
• Own some shorter duration
bonds alongside core holdings
as defensive strategy. Active
sector allocation can mute the
risk of inflation
Consider Fixed Income to Help
Stabilize a Diversified Portfolio

Call our team at 303.531.8100 or click here
to have one of our advisors reach out to you.

22
Investment and insurance products and services are not a deposit, are not FDIC
insured, are not insured by any federal government agency, are not guaranteed by the
bank and may go down in value. Opinions and estimates offered constitute our
judgment and are subject to change without notice, as are statements of financial
market trends, which are based on current market conditions. This material is
not intended as an offer or solicitation for the purchase or sale of any financial
instrument. This material has been prepared for informational purposes only, and is
not intended to provide, and should not be relied on for accounting, legal or tax
advice.
Disclosures

2017 Economic Outlook

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